Corporate social responsibility and shareholder's value : an empirical analysis

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Title: Corporate social responsibility and shareholder's value : an empirical analysis
Author: Becchetti, Leonardo ; Ciciretti, Rocco ; Hasan, Iftekhar
Organization: Bank of Finland
Series: Bank of Finland Research Discussion Papers
Series number: 1/2009
Year of publication: 2009
Publication date: 1.1.2009
Published in: Published in Journal of Business Research, Volume 65, Issue 11, November 2012: 1628-1635
Keywords: yritykset; vastuu; strategiat; kansainvälinen; indeksit; osakemarkkinat; osakkeet; tuotot; rahoitusmarkkinat; yhteiskuntavastuu
Abstract: In today s global economy, corporate social responsibility (CSR) is a core component of corporate strategy. Due in part to financial scandals, losses, and the diminished reputation of the affected listed companies, CRS is emerging as a crucial instrument for minimizing conflicts with stakeholders. While corporations are busy adopting and enhancing CSR practices, there is (beyond a very few notable exceptions) no established empirical research on its impact and relevance for the capital market. Our paper investigates this issue by tracing market reactions to corporate entry into and exit from the Domini 400 Social Index (a recognized CSR benchmark) between 1990 and 2004. Our paper highlights two main findings: i) a significant upward trend in absolute values of abnormal returns, irrespective of the event (entry/exit vis-à-vis the index) type; and ii) a significant negative effect on abnormal returns after announcement from the Domini index. The latter effect continues to persist even after controlling for concurring financial distress shocks and stock market seasonality.
Note: Ilmestynyt myös Journal of Business Research 2012 ; 65 ; 11.

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